Northern Businesses Must Prepare To Subsidise Major Hike Southern Rate
Friday, 02 October 2009
Leeds-based property consultant GVA Grimley is urging all businesses throughout the UK to factor in potential increases in business rates.
Despite the economic downturn, the Government plough on with the Revaluation of all commercial properties with effect from 1 April 2010. The new Rateable Values will be published in draft form from 1 October 2009. Therefore, all commercial occupiers should expect to receive notification of their new assessments in the coming days.
Many occupiers in the South should expect to see substantial increases in Rateable Values due to the rental growth that has occurred between 1 April 2003 and 1 April 2008 (the valuation dates used for assessing Rateable Values). Conversely, businesses in the North may receive the welcome news that their Rateable Values have either remained static or have decreased. Unfortunately however, this will not necessarily translate to a reduced rate bill from 1st April 2010, according to GVA Grimley.
Claire Paraskeva, director at GVA Grimley comments: "The impending Rateable Value increases we expect to see in the South will undoubtedly have a major effect on some businesses in that part of the country. However, for the most part, Northern occupiers will be inadvertently subsidising any increase in rates bills faced by Southern businesses, by foregoing a reduction in their own rate liabilities from 1 April 2010 onwards. The Government will introduce transitional arrangements to 'phase in' large changes in Rateable Value both upwards and downwards, over the 5 years of the Revaluation. So those businesses in the North, where Rateable Values may have come down, will not see the immediate benefit of this change reflected in their Rate bill. Instead, their bill will be 'phased downwards' over a number of years to its realistic level to plug the financial gap of rates bills in the South being 'phased upwards'.
As Business Rate bills are calculated by multiplying the Rateable Value of a property by the Uniform Business Rate (UBR), expected changes in the UBR from 1 April 2010, should have also been a welcome relief for businesses in the North. The Government's consultation paper suggests the Uniform Business Rate (UBR) for 2010/11 (including the small business rate relief supplement) will be in the region of 41.7p - down by 14% from its current level of 48.5p.
Claire explains further - 'The double whammy of reduced Rateable Values coupled with a reduction in the Uniform Business Rate from 1 April 2010, could have been a breath of fresh air for many troubled businesses in the North; especially in the Manufacturing Sector, where the severe curtailment of Empty Rates Relief has been the final nail in the coffin for some operators. However, due to the implementation of the proposed 'phasing arrangements', it is unlikely that companies who need reduced rate liabilities the most, will receive the real benefit for another 4 years at least.'
There is some welcome news however for small businesses, where the Rateable Value thresholds to obtain small business rates relief will be increased from £21,500 to £25,500 in Great London and from £15,000 to £18,000 elsewhere.
Claire Paraskeva advises: "Irrespective of Rateable Value movement in the North and South, following the imminent release of the Draft 2010 Rating List, there are a number of measures we would advise businesses to pursue in order to minimise their financial liability come 1st April 2010. Firstly, we would urge businesses to start making realistic budgets to ensure rate increases are reflected in the 2010 forecasts. Also ensure your 2005 List assessment is as low as possible by carrying out a review of the Rateable Value, this could lead to retrospective rates savings. Lastly, ensure action is taken to mitigate the new 2010 Rating List assessment. Early representation to the Valuation Office Agency on the Draft List assessment could result in a lower Rateable Value before the list comes into force. Alternatively, an appeal against the actual List assessment soon after 1 April 2010 could mitigate your costs into the future."
GVA Grimley is one of the largest rating consultancies in the UK with 50 dedicated rating professionals based in eight regional locations. Over the last seven years the company has saved 1,400 clients over £1.2 billion in rates.
EndsFor all media enquiries, please contact:
Edward Dewar, PR Manager on 020 7911 2664
GVA Grimley Ltd, 10 Stratton Street, London W1J 8JR.
(1) GVA Grimley Ltd is one of the UK’s leading firms of property consultants operating from 12 offices with 890 fee earners generating a turnover of £137.3 million year ending 30th April 2009.
(2)The firm provides a full range of property-related services including agency, planning and regeneration, rating, building consultancy, investment, management and valuation consultancy. GVA Grimley also offers specialist advice in areas such as telecomms, education, healthcare, retail, contamination, plant and machinery and the automotive and roadside sectors. GVA Grimley is a founding member of GVA Worldwide with a global reach throughout Europe, North America and Australasia, with real estate representatives in 90 offices serving 20 countries. For further information about GVA Grimley please visit www.gvagrimley.co.uk